Introduction:
Today I'll be showing you the top three cryptos I'm buying in September 2023. every month I choose three crypto all coins that have the most significant Catalyst events happening in that month which makes them primed for big moves. I'm a crypto Android investor and I have invested in over 100 companies. I share my views on market trends and investment strategy to build wealth in crypto if you want to see previous awkward mentions in our top cryptos series.
MakerDAO $MKR:
let's get into the first altcoin that I'm buying this year, and that is MakerDAO $MKR. MakerDAO is one of the oldest and most established DeFi projects. It's the entity behind the DAI stablecoin. The concept of the project is very simple: it uses assets like Ethereum and Bitcoin as backing to issue the decentralized stablecoin DAI. The reason why I like Maker right now is because of their updated roadmap called 'endgame,' which includes a tokenomics revamp, the launch of six new sub-DAI tokens, and even a brand new chain. This is a five-phase initiative that officially kicks off in September. The first phase is the beta launch, which aims to rebrand the Maker and DAI tokens. Maker and DAI are very established and trusted brands in the cryptocurrency space; however, one of the biggest drawbacks is that because the Maker token and the DAI token have separate brands, many people don't even know that the DAI stablecoin is under the same project as Maker's MKR token. So this new token rebrand will aim to change that. The token names haven't been announced, but they probably will have similar names to each other, like how the Frax stablecoin and Frax shares have a similar brand. As part of this upgrade from the Maker token to the new governance token, the Maker token will also have a redenomination of 12,000 new governance tokens to one Maker token. This essentially works like a stock split, where the Maker token will be split into 12,000 to 1. After this split, the Maker token will have 12,000 times more supply, but the unit price will actually go down by 12,000 times. This means the new Maker token will be worth less than 10 cents, which is a much smaller number, and that actually makes it more attractive to retail investors. Most new cryptos today choose to launch with a very high supply, like 1 billion to 10 billion. This makes the unit price much lower, usually from one cent to one dollar, even though it doesn't make a difference when it comes to market cap. These smaller unit prices do act as a catalyst for retail investors, as the less sophisticated buyers would just think that those coins are cheaper simply because the unit price is cheaper.
Then, in phase two, we will have six MakerDAO sub-DAIs launching with their own governance tokens. These are six new projects launching under the MakerDAO brand, and these new tokens can only be received by farming the Maker or DAI token. There is no token sale; you cannot get them early, just like the early days of DeFi summer. People will be able to deposit Maker and DAI into a liquidity pool and start to earn these new project tokens as rewards. These tokens will undoubtedly do well in the market because it comes from MakerDAO, but on top of this, it will also significantly boost the yield percentages of the DAI stablecoin, which will drive more TVL to MakerDAO, the project, and thus feed into the flywheel. This is the exact same playbook that Compound used in DeFi summer 2020. So many projects launched their new tokens through farming. The first sub-DAI project is already live, called Spark Protocol. This is a fork of the Aave lending project but uses the DAI stablecoin, and this project already has $200 million in TVL. But it doesn't have a native token yet. On their website, you see the Spark (SPK) token is already confirmed, and in this announcement, they said that the pre-farming period is already starting. So people that are using this protocol right now will be getting this SPK token early. Not many people know about this early farming yet, so you can try to take advantage of this. The token will only launch once the official farming period starts, but by then, the yield will probably get diluted. MakerDAO is also having a public launch event called Subdial Genesis, and this is happening on September 3rd. After this event, a lot more retail investors should hear about these sub-DAI tokens and realize that they can take advantage of these opportunities. And that's why I believe the sub-DAIs will likely launch in September, and with the farming launching, MakerDAO's price should start to move.
The other phases of MakerDAO's end game include Phase 3, which is governance AI tools, and later Phase 4 called governance participation incentives. Lastly, Phase 5 is when they will launch their own brand new blockchain. You might have heard of this news this week; the founder of MakerDAO, Rune, has published on Twitter that he actually wants to fork Solana to make their own blockchain. There is a whole discussion on their forum right now. Essentially, they looked at all the blockchain code bases and realized that Solana actually has one of the best ones. However, he also noted that the fifth phase of the end game is a very long-term project and will only likely take place after three years. So I'm not counting on this event yet. I think the immediate short-term price action will come from the token new rebrand, the redenomination, and the sub-DAIs launching their farming. MakerDAO also has a really good tokenomics, being one of the earliest DeFi projects. Out of the 1 million max supply, 90% of that is already circulating in the market, so there really isn't much dumping pressure to come. MakerDAO's price chart also looks primed for a run. All of this hyped-up price action has been beaten down in the bear market, and price has been consolidating in this sideways period since June 2022. So, for the past one year, coming out of this end game announcement, Maker's price has had its first rally out of this sideways consolidation period. We can see the bear market resistance level quite clearly right around the $1,000 mark. This level was tested three times during this bear market, and now that the price has broken above the $1,000 resistance, it has now come down to retest it and starting to bounce. This is a classic breakout retest pattern, so right around the $1,000 mark is a really good entry opportunity because we have a very clear stop loss right below this level, let's say at $850. But as long as this $1,000 level holds, this will show Maker is starting a new uptrend and will likely head much higher. My short-term take profit targets are between $1,700 and $2,000. These levels acted as significant support levels during the 2021 bull market, so once we revisit these levels, it will act as strong resistance. I will be holding my Maker position at least for September. Once the sub-DAI tokens start farming, but this will most likely last much longer until early 2024. From what I've read on Twitter, the tentative timelines are for Phase 1 and Phase 2 to be completed at the earliest in Q1 2024. This is when all the six sub-DAI tokens' farms will start and when the new Maker and DAI token rebrands are completed. Therefore, I think in early 2024, most of the retail investors and the hype would have caught on, and that's when I will look to take profit from this position.
$DYDX:
Moving on, the second crypto I'm buying this year is DYDX $DYDX. DYDX is one of the oldest decentralized perpetual exchanges. It functions just like an advanced centralized exchange with order books, stop-loss, limit orders, and you can even go long or short with leverage. Now, I have used many of these decentralized exchanges, but DYDX has the most advanced user interface, the deepest liquidity, and, most importantly, the most trading pairs available. However, the reason DYDX doesn't get much coverage is because the DYDX token has very bad tokenomics. You see, way back in 2021 when DYDX first launched, the founder has said that DYDX token holders do not have any claim or expectation on the exchange's revenue, and all of these revenue were going to DYDX Trading, the company. On top of this, the token was distributed through a large airdrop for free and was constantly given out as a reward to the platform user. This introduced constant inflating supply but no demand. However, all of these are changing in September with the launch of the DYDX v4 platform.
DYDX v4 is a fully decentralized upgrade to the exchange, which will replace the current platform with a self-governed app chain using the Cosmos technology. Aside from the upgrades to the exchange platform, the most important upgrade is with the DYDX token. After the V2 launch, the DYDX token will become the native token of DYDX chain. This means users can stake the token to help secure the network, which is not that exciting by itself. But because the DYDX chain will also receive all trading revenue from the exchange, this means DYDX stakers will also receive a high percentage real yield. Although there isn't a clear percentage revenue share on their website yet, there have been some statements released by the team that clearly point towards a high revenue share coming to the token.
Here are all the important points to know about their new tokenomics:
Beginning with DYDX v4, DYDX Trading Inc., or the parent company, will not operate any part of the protocol. As a result, it will no longer receive any revenue based on trading fees from the protocol or from the exchange. The same is true for all centralized parties, unless the community decides otherwise. This means all trading fees will start to be distributed to the DYDX chain and the protocol.
Since all the revenue will go to the protocol, how much of it will actually go to the DYDX token holders? Well, that's defined in this rewards and parameters document. Usually, these decentralized projects will have a DAO structure that collects some of the revenue into its treasury, and the rest goes to the token holders. This number is defined in this distribution parameters section. You see there is a community tax, which defines how much percentage of the total trading fees will go to this community treasury, which is essentially the DAO treasury. Luckily, this starts off at 0%, which means none of the revenue will go to the DAO treasury, and in turn, all of it will go to the token stakers. First, check this out: "The initial software code will contemplate fees accruing to validators, which then may be shared with stakers that provide the staking services to validators." This means even if you cannot run a validator on the DYDX chain, you can still delegate your DYDX stake to any validator and still receive the trading fees. How much can you receive? Well, that's defined in this staking parameters section. There is a minimum commission rate of 5%, which means you can receive as much as 95% of the trading revenue from DYDX exchange by staking your DYDX tokens with any of the validators. It's up to the validators to decide how much revenue they want to share with the token stakers, but to make themselves competitive, these rates will be really good. So, I'd expect you can get something like 90% of the revenue share from the DYDX exchange. This will be massive. If you're familiar with other real yield protocols in DeFi, these numbers are insanely high in comparison. Some of the popular real yield exchanges like GMX only share 50% of the revenue with its token holders. The latest real yield project that you've probably heard of is Rari Capital's Robit, and they only share 20% of the revenue with the token holders. So, 90% from DYDX will be massive.
Okay, now that we know the DYDX token will be receiving high revenue shares, how much is this revenue actually worth? Well, DYDX has the highest trading volume of all perpetual decentralized exchanges. In the last year, they have generated over $300 billion in trading volume. Trading fees on DYDX are 0.015% for makers and about 0.04% for takers, so the average is 0.0275% for all trading volume as fees. So, we can use this to calculate the total revenue: 0.0275% times $300 billion equals $82.5 million of revenue per year. The current market cap of DYDX is $350 million. Let's assume that 50% of these circulating DYDX tokens will be staked; that is $175 million staked. Then, using $82.5 million, dividing it by $175 million staked, that gives us 47% of real yield distributed to these token stakers per year. This will be an extremely high real yield percentage and will likely drive up the price of DYDX just from people chasing this yield. In comparison, the other popular real yield decentralized exchanges like GMX and Gains Network only give about 5% yield per year. Simply put, DYDX token holders will start to receive a maximum of $80 million in revenue per year just for staking the DYDX token. And add the current market cap of $350 million, the DYDX token is heavily undervalued.
Now, there is one major caveat I am watching, and that is the upcoming token unlock for DYDX. We can find this on the Token Unlocks app website. You see, on December 2nd, 2023, DYDX investors and the team will receive a large chunk of new tokens, which will increase the circulating supply by about 40%. So, this major upgrade of DYDX v4 is clearly planned around the same time where the early investors can start to receive their tokens and take profit. This means from now until December, we will likely see a major hype coming for DYDX with the v4 upgrade to push the price up, leading to their token release. But once the token unlock events happen in December, price will likely top out due to the new sell pressure.
With this in mind, I am still heavily buying DYDX right now and closely watching the DYDX v4 launch this month. But I will aim to take profit sometime in late November and early December, as this will be when the early investors will use this hype to start taking profits. DYDX's price chart also looks quite good. It has also been consolidating for the past one and a half years. In order for this rally to start, we need to see price break above this $2.60-ish range, which has been acting as resistance for three of the past rallies in this bear market. I will be using the last low at $1.50 as a stop loss, as this level needs to hold in order for the uptrend to continue. My take profit level will be between $4.40 and $7.00. This is the last consolidation range we had in the bull market before price officially crashed. So, there's a lot of resistance in this area, and once we revisit it, that will act as strong resistance.
Astar Network $ASTR:
The last crypto I'm buying heavily in September is Astar Network $ASTR. Astar Network is a Layer 1 blockchain that supports both EVM and WebAssembly technology. It was first launched as one of the top Polkadot parachain projects. However, the reason why I like Astar right now is because it is the most popular smart contract platform in Japan. There is an impending crypto boom in Japan right now. This all happened in July when the Prime Minister of Japan, Fumio Kishida, addressed the country's policy to start promoting Web 3 innovation. He stated that Web 3 is a part of the new form of capitalism and can transform the internet. Behind the Japanese crypto push, Binance also launched their Binance Japan arm in August. These moves are highly similar to the China coin narrative we had earlier this year when Hong Kong's government made a push for crypto and partnered with key exchanges. The altcoins associated with these initiatives saw huge growth. It's not only because local residents in these regions can buy crypto easily, but also because it gives the global crypto traders another narrative to speculate on. People flooded into these new China coins back in February, such as Conflux (CFX), and I believe Astar is just like the Conflux to the China coins narrative.
Astar is by far the best-adopted Layer 1 blockchain in Japan. For example, the largest railway network, JR, has already partnered with Astar to issue their NFTs. Astar also received a big investment from Sony and has hosted incubation programs together with Toyota and Sony. But perhaps their biggest and most impressive collaboration is with NTT Digital to create a Web 3 training program and enhance network infrastructure. This sounds kind of vague, but you have to understand what NTT is. NTT stands for Nippon Telegraph and Telephone. NTT is the largest publicly traded company in Japan, and the biggest owner of NTT is the Japanese government. It's essentially the government-owned official telecom provider in Japan. Last year, NTT announced that it will invest up to $4 billion in the Web 3 industry with this NTT Digital entity, and these investments will be done in partnership with 13 firms. Out of this list, we have Startrail Labs, the parent company of Astar Network, and Astar is the only publicly traded crypto on this partnered list.
So, my bet is that a lot of the open public decentralized applications will start to build on Astar Network in order to take advantage of these huge ecosystem funds coming from the Japanese government. These partnerships put Astar at the top of the Web 3 infrastructure projects serving Japan, and I highly doubt any other player can have this level of penetration. One side note is that there really are not many coins that are popular in Japan because the country has a very strict crypto environment for new project innovation. For example, on the most popular Japanese crypto exchange Bitbank, all of these coins are just legacy coins that we all recognize. Astar is the only coin on this list that I don't see mentioned in the Western audience, but it is popular in Japan.
One last catalyst that's coming in August is that Astar Network will be launching its 2.0 upgrade called the "Supernova" around September 14th during the Token 2049 event. This upgrade will bring new tokenomics, including a token burn, and other roadmap items to the protocol. According to Astar Network's CEO, Sota, the Supernova upgrade will heavily cater towards enterprise adoption in Japan. This will further cement their position as the number one smart contract blockchain that's being used in all of Japan's official initiatives.
In terms of the trading volume, it has seen a significant uptick right around mid-July when this Japanese crypto push officially started, and Astar Network's price chart is also looking quite healthy. Since the price crash in June due to the Binance spot, price has seen a new uptrend clearly with higher highs and higher lows, and this is breaking above the bear market resistance level right around $0.05. As you can see, this level has been tested multiple times in this bear market, and in the last rally, we broke above it, and this level even acted as significant support again. So now, as price is coming back down to retest this $0.05 level, I think this is a great entry point. I will be using this previous low around $0.04 as a stop loss because this previous low needs to hold in order for the uptrend to continue, and assuming the Web 3 adoption continues in Japan, I will be targeting this previous high at around $0.10 as the first take profit level. This gives us a really good risk-to-reward ratio of over five to one.
In terms of the timeline, I'm buying Astar and holding at least until the end of September when Astar Network 2.0 upgrade is live. If there is a major price spike this month, I will take profit from this event. However, I think chances are we will only see more hype coming to the Japanese coins slowly in the next few months. The Japanese government is just starting their Web 3 push now, and Binance Japan is less than one month old. So, I will likely hold Astar until the end of the year and only exit when there is a Japanese coin narrative popping off in the retail crypto audience.